What a fickle bunch we are. It was only three years ago when the supermarket
chain first broke through the £3bn annual pre-tax profit barrier.

At the time many in the chattering classes were wringing their hands about how Tesco was too large. How it was behemoth squashing independent retailers and farmers alike.

Now, we are wringing our hands about how Britain’s biggest retailer, its biggest private sector employer, is going to the dogs.

What tosh. This is still a company that made annual profits of £3.84bn in the year to the end of February. Sales rose too, admittedly only in Britain thanks to opening new shops.

But this is still a company with a market share nearly twice as large as its nearest rival Asda. It is still a company that is ruthless with its suppliers – only this week Dairy Crest has been knocked for six by losing a Tesco contract – and it is still a company with the ability to provide customers with a huge array of plentiful, cheap products.

But equally, its place as Britain’s preeminent retailer should not be taken for granted. After all, it seemed inconceivable in the 1980s that Sainsbury’s would lose its number one crown. For that matter, it seemed inconceivable in the 1960s that Co-Operative Stores would ever lose its top slot. These things are not written in stone, and consumers now are, like the chattering classes, a fickle bunch and more willing to shop around than ever before. In five years time it is more likely that Tesco’s market share, currently 30.2pc, will be below 30pc than above it.

But one thing is worth pointing out. Tesco’s troubles have come about, in part, from its sheer scale. Its record profits were propped up by £1.1bn of overseas profits (more profit than any other British retailer can muster in total).

The scale meant it started to take its customers for granted and lose some focus. And when you are appealing to over 18m customers a week it is inevitable that you can’t keep them all happy. Tesco tried to be both a leader on price and offer a quality selection of food, and failed at both. Asda comes out consistently cheaper in consumer tests on prices, and Sainsbury’s, after a few tricky years, has revamped its Taste the Difference range. For those with money in their pockets Waitrose has emerged as increasing national force, opening stores ever further north. Tesco's strategy announcement this morning appears to be addressing these problems, promising “warmer” stores, keener prices, and higher quality food.

The statement also makes clear that Tesco has one enormous advantage over its rivals – namely, its sheer scale. Many are uneasy about how it has ended up with 2,700 outlets. It had fewer than 2,000 five years ago and many of the new ones are small Express stores popping up on high streets, often making life very difficult for local traders. This network of outlets, however, provides it with an enormous opportunity to be the market leading click-and-collect operator. This is the industry jargon for an increasing trend in internet retailing. Shoppers want to buy online, but they don’t want to hang around all day for the delivery. They are, in fact, quite happy to pick it up from a convenient location open all hours, such as an Express store. Tesco has started to offer this service, but not in all stores. A year ago it was 500 shops, now the service is in 770 stores, it said this morning, and it wants to carry on rolling out the service, particularly to its Express stores. So far, just 70 Express stores are part of the scheme.

Its non-food offer is not that compelling. This is where the opportunity really lies – to challenge not just Sainsbury’s and Asda, but Amazon and Argos. Tesco said this morning it had doubled the number of products on its non-food website (which it calls Tesco Direct) to 75,000 items. This is considerably more than the estimated 45,000 products on sale at Argos’s website. The key thing will be to ensure they are the right brands customers really want.

No other retailer in Britain, with the exception of the Post Office, has so many outlets. And no other retailer has such as sophisticated distribution network. Tesco’s challenge for the next decade is to develop a range of products that actually makes consumers want to click on their website, week in week out.